Stock market drama may be close to resolution point

So now the issue is where the “climax” in pricing develops, given a profound lack of indicator confirmation on the Intermediate and Major Cycles for the past 1 ½ years. Evidence over the past three weeks is suggesting such final resolution may be developing. As index prices rallied to their best levels in September and since March 2009 with no indicator confirmation, the turn to the downside after a brief short-term upside feint was abrupt. Since September 14 the NASDAQ Composite has lost 5% of its value and faded back toward a rising uptrend line (3020) in effect since June 4 while coming within range of the lower edge of its 10-Week Price Channel (3009.09 through March 19). And even with that initiation of “falling action,” the Intermediate Cycle in the NASDAQ Composite, as is the case with the other major indexes, is still “Overbought.”

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

While some might point out that NYSE Trading Volume has been shrinking for the past three weeks and that that movement could mean selling is drying up as the short-term trend has become “Oversold,” we could suggest that in the early stages of any larger cycle decline, “Oversold” is not necessarily “Oversold.” It can merely be a reflection of new negativity creeping into the market.